Bangladesh's economic miracle in jeopardy

TL;DR

Corruption Threatens Growth: Bangladesh's rapid economic rise faces risks from corrupt politics under Sheikh Hasina, now greater than poverty.
$2,500 GDP Per Capita: GDP per head stands at around $2,500, higher than India's, with 7.1% pre-covid growth outpacing China.[[1]](https://caliber.az/en/post/the-economist-bangladesh-s-economic-miracle-in-jeopardy)[[2]](https://www.economist.com/leaders/2023/03/02/is-bangladeshs-admired-growth-model-coming-unstuck)
Governance Imperils Progress: Institutional decay, money laundering, and autocracy could derail development and spark unrest ahead of elections.

The story at a glance

Bangladesh has transformed from a poverty-stricken nation post-1971 independence into a development model driven by garments, NGOs, and infrastructure under Prime Minister Sheikh Hasina, who has ruled since 2009. The article argues that while social gains like better child mortality and female literacy persist, corrupt politics, economic shocks from covid-19 and Ukraine war, and autocratic governance now threaten this progress. This analysis appears amid a cost-of-living crisis, depleted reserves, and looming elections by early 2024, with opposition protests rising.

Key points

Population of 170m makes Bangladesh the world's eighth-most populous country, bordered by India and the Bay of Bengal.
Pre-covid growth averaged 7.1% annually over five years, surpassing China; expected to exit UN least-developed status in late 2026.
Garment industry boosted female workforce from 4% to 35%; child mortality now better than global average, female literacy at 73%.
Foreign reserves fallen below $30bn; IMF $4.7bn loan agreed in January 2023 amid import curbs and taka volatility.
Overreliance on garments risks loss of Western tariff exemptions post-LDC graduation; rivals like Cambodia, Ethiopia loom.
Business environment ranks 15th of 17 Asian countries per EIU; bureaucracy hampers pharma, electronics.
Widespread corruption includes non-performing loans to cronies, licence raj extortion, money laundering ("begum para" in Toronto).
Hasina's Awami League dominates via patronage, jailed dissidents, fearful campuses; opposition BNP protests raise violence fears.

Details and context

Bangladesh overcame early disasters like famines and cyclones through NGOs such as BRAC, which pioneered microfinance and now operates abroad. Two-fifths of people farm, aided by World Bank roads linking villages to markets. Garments thrived after duty scraps and labour law updates.

Hasina invested heavily in infrastructure—a Padma River bridge, Dhaka metro, power plants—but congestion and pollution persist short-term. Pandemic and Ukraine war triggered crisis: rough sleepers in Dhaka, reserves drained.

Structural woes compound politics: garment dependency vulnerable post-2026 LDC exit, no trade pacts, little China+1 shift. Remittances from 10m overseas workers prop up payments. Banks plagued by political lending; security extorts fees.

Hasina, 75, builds cult around father Mujibur Rahman, echoing his failed one-party push. No clear successor risks chaos; BNP's Khaleda Zia under house arrest.

Key quotes

“Overreliance on garments is a ‘serious weakness,’ says Fahmida Khatun of the Centre for Policy Dialogue.”[[1]](https://caliber.az/en/post/the-economist-bangladesh-s-economic-miracle-in-jeopardy)

Why it matters

Corrupt governance erodes institutions key to sustaining Bangladesh's social and economic gains, potentially stalling South Asia's standout performer. Investors face risks from policy unpredictability, while 170m people endure cost-of-living strains and unrest threats. Watch election violence, IMF implementation, and post-LDC trade shifts, though autocracy may suppress opposition.

FAQ

Q: What drove Bangladesh's economic progress?

A: Garment exports lifted female employment to 35%, NGOs like BRAC improved health and literacy, infrastructure like Padma bridge eased bottlenecks, and pre-covid growth hit 7.1% yearly.

Q: Why are reserves depleting?

A: Covid-19 and Ukraine war shocks caused import surges and crises; government import curbs via permits hinder exporters' inputs and letters of credit, with reserves under $30bn prompting IMF loan.

Q: How does corruption manifest?

A: Banks issue non-performing loans to cronies, a licence raj by politicians and security extorts fees, money laundered abroad, institutions captured for Awami League loyalty.

Q: What risks post-LDC graduation?

A: Loss of Western tariff exemptions hits garments; low-cost rivals like Cambodia threaten share; bureaucracy blocks diversification into pharma, electronics despite potential.